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Greeks defy Europe with overwhelming referendum ‘No’

On 5 July 2015, Greeks overwhelmingly rejected conditions of a rescue package from creditors, throwing the future of the country’s euro zone membership into further doubt and deepening a standoff with lenders.

In Athens, thousands of jubilant Greeks, waving flags and bursting fire crackers, poured into the city’s central square as official figures showed 61 percent of Greeks had rejected a deal that would have imposed more austerity measures on an already ravaged economy.

Stunned European leaders called a summit to discuss their next move after the surprisingly strong victory by the ‘No’ camp defied opinion polls that had predicted a tight contest.

The euro currency and stock prices in Asia fell sharply in early trade, although dealers emphasised that markets were orderly, with no signs of financial strain.

“You made a very brave choice,” Prime Minister Alexis Tsipras said in a televised address. “The mandate you gave me is not the mandate of a rupture with Europe, but a mandate to strengthen our negotiating position to seek a viable solution.”

For millions of Greeks the outcome was an angry message to creditors that Greece can no longer accept repeated rounds of austerity that, in five years, had left one in four without a job and shrank the economy by a quarter.

Officials from the Greek government, which had argued that a ‘No’ vote would strengthen its hand to secure a better deal from international creditors after months of wrangling, immediately said they would try to restart talks with European partners.

But euro zone officials shot down any prospect of a quick resumption of talks.

Many of Athens’ partners had warned that a ‘No’ vote would mean cutting bridges with Europe and driving Greece’s crippled financial system into outright bankruptcy.

EU clinches loan bail-out deal with Greece

On 13 July 2015, Eurozone leaders reached a unanimous agreement after all-night talks in Brussels to move forward with a bailout loan for Greece. The agreement with creditors will allow Greece to “get back on track” and will not have to leave the euro currency, the so-called Grexit.

EU officials said Greek Prime Minister Tsipras finally accepted a compromise on German-led demands for the sequestration of Greek State assets to be sold off to pay down debt.

The Greek leader also dropped resistance to a full role for the International Monetary Fund in a proposed 86 billion euro ($95.78 billion) bailout, which German Chancellor Angela Merkel has declared essential to win Parliamentary backing in Berlin.

On 15 July, the Greek parliament passed sweeping austerity measures demanded by lenders to open talks on a new multibillion-euro bailout package to keep Greece in the euro, but dozens of hardliners in the ruling Syriza party deserted Prime Minister Alexis Tsipras.

The package was approved with 229 votes in the 300-seat chamber. Prime MinisterTsipras said there was no alternative to the package, which he acknowledged would cause hardship, but he stood by the decision.

In exchange for funding worth up to 86 billion euros, Greece has accepted reforms including significant pension adjustments, increases to value added tax, an overhaul of its collective bargaining system, measures to liberalise its economy and tight limits on public spending.

It has also agreed to sequester 50 billion euros of public assets in a special privatisation fund to act as collateral on the deal.